| 7.
ELIMINATING GRACE PERIODS |
That fabulous offer you received in the mail for a gold card with
a $10,000 credit limit, and lots of features may not be so great.
The most common "string" attached is the card has no grace
period. You are charged interest on everything from the day you buy
it, even if you pay on time.
REMEDY: Throw the
offer out!
|
| 8.
DISAPPEARING BENEFITS |
Many banks enticed you to sign up with extra benefits such as lifetime
warranty, a 5% discount on all travel, or protection if an item purchased
is lost. Now, some banks have cut back on these extras without the
fanfare that launched them.
REMEDY: Read annual
disclosure of changes, and switch cards if need be.
|
| 9.
DOUBLE FEES ON CASH ADVANCES |
Most credit cards impose both finance charges and a transaction fee
on cash advances. Interest starts from the day of the advance, and
the transaction fee can be up to 2.5% of the amount taken. Beware
of cards advertising "no finance charges." Transaction fees
may still apply.
REMEDY: Limit cash
advances.
|
| 10.
FEWER RIGHTS ON DEBIT CARDS |
Some Visa and MasterCards have payments deducted directly from your
checking account (debit cards). Under federal law, you technically
don't have the same right to "charge back" problem purchases
as you do with a conventional credit card. Also, if the card is lost
or stolen, you can have up to unlimited liability for losses if you
don't report the problem within 60 days, which is different from the
$50 maximum liability on credit cards. (Exception: the $50 limit applies
to debit cards as well as to credit cards in Massachusetts.)
REMEDY: Know your
card. Is it a credit cards or debit cards? They can look alike.
|
| 11.
MISLEADING MONTHLY MINIMUMS |
You may think it is beneficial to have a card where you only need
to pay 2%-3% of your balance monthly. It is just the opposite. The
bank stands to make far more money from finance charges the longer
you carry out payments--and you foot the bill.
REMEDY: Pay all you
can monthly.
|
| 12.
INTEREST FROM DAY ONE |
When you carry a balance from month to month, there is no grace period
on new purchases on most cards. The 20-25 day grace period where no
finance charges accrue does not apply when you don't pay in full each
month.
REMEDY: Find cards
that exclude new purchases when calculating interest.
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